When a family breadwinner or income-earner passes away, seventy-five percent of families in developing countries like the Philippines are susceptible to both the emotional devastation and the loss of income that comes along with it, according to research conducted by a Swiss company called the Swiss Re Institute.
This void in mortality protection is referred to as the mortality protection gap.
When a breadwinner is in good health and has a reliable source of income, it is not uncommon for him to have the mentality that he is “superman” and will never be unable to care for his family.
Nevertheless, the prospect of suffering a life-threatening illness, being disabled, or even passing away at an early age hangs continually over this “superman” concept, and ignoring these dangers will not make them disappear.
Without a Plan B in the form of proper financial planning and a risk management plan, households are left vulnerable to financial ruin.
How a Plan B protects the family
“A lot of Filipino breadwinners, especially those in the middle-class, know that if anything unpleasant happens to them, their families will be severely affected. How will their family pay for housing? Utility expenses? How will their children continue their schooling? How will they pay for their daily needs? Unfortunately, many do not face this reality or prepare for the worst. Doing so underestimates the potential financial impact on their families,” said Renato Vergel De Dios, President and CEO of BDO Life.
Vergel De Dios mentioned that, according to the findings of a study conducted by the United Nations, there are four major factors that pose a threat to the financial stability of a family: unemployment or underemployment; sickness and disability; the death of a spouse or the separation of a couple; and old age and death.
Vergel De Dios made this observation.
Anyone could be affected by one, several, or all of these elements at the same time. It is simply a matter of time before it happens.
He made the point that the pandemic caused by the coronavirus demonstrated how financially precarious many Filipino families are.
“In the past two years, we’ve all lost a relative or a friend to COVID-19. One day, they’re okay. A few days later, we hear that they were rushed to the emergency room. We next learn that they’ve been hooked up to a ventilator. A few days later, they’re gone. This pandemic has served as a wake-up call to the fact that we need to be financially prepared for such contingencies,” Vergel De Dios explained.
To protect families from financial vulnerability, Vergel De Dios advised that aside from saving money to fund emergencies and future plans, it’s most important to have a Plan B aka life insurance.
“Life insurance is the ultimate Plan B. When the breadwinner passes away, it provides funds to family members and buys them time—from a few months to a few years—to readjust their lives. It’s hard enough for family members who are grieving over the death of a parent or a spouse. It is heartless, to say the least, to impose on them the financial responsibility to pay for the next round of bills. They deserve to be protected from all that pain and suffering. And life insurance is the only financial instrument that can alleviate that,” said Vergel De Dios.
Life insurance is a dependence Plan B for Filipino families
Fitz Villafuerte, a licensed financial adviser, talked about how life insurance can protect and keep a family’s financial security in his podcast The 80 percent.
“When my client’s father died, the family did not suffer much financially. The father was insured, so he left behind enough money so that the family had the income to live on as they adjusted to their new situation. The father even left behind money for the youngest child’s education,” said Villafuerte.
Vergel De Dios was a guest on the podcast episode “On National Security and Life Insurance” by Villafuerte.
Here, he said that because life insurance has done well in the Philippines for more than a century, breadwinners can be sure that their families will have a reliable source of money to protect them. If you don’t have it, it’s like sending your family across the rough sea of life with only a life jacket.
“We all assume that we will always stay healthy, that we will always be around to bring home the required family income month after month. But life makes no guarantees. A high-paying job, a successful business, and reasonably good health—these are no assurances that our family’s financial security is assured, without a Plan B. Just ask the family members of individuals with those same qualities yet who lost their lives during the pandemic,” added Vergel De Dios.
Filipinos are known for putting their family and friends ahead of everything else. Yet, for some reason, many people put off making the choice to buy the financial tool that, in the worst-case scenario, can help them keep the lifestyle they’ve built for their families. Life insurance is the only way to protect a grieving family from day-to-day financial worries and make their emotional pain easier to handle.
With all the risks and unknowns that Filipino families face today, BDO Life makes it easy and reliable to have a Plan B by offering a wide range of life insurance products and a large network of Financial Advisors in BDO branches all over the country.
BDO Life is a company that is owned by BDO Unibank, which is the biggest bank in the country. Talk to a BDO Life Financial Advisor at the BDO branch near you if you have any questions.
